eminent domain

 

the right of a government to force the owner of private property sell it if it is needed for a public use. The right is based on the doctrine that a sovereign state has dominion over all lands and buildings within its borders, which has its origins in the landholding system under feudalism. Eminent domain is implicitly enshrined in the U.S. Constitution, which in the Fifth Amendment requires that private property not be taken for public use without just compensation. The process of acquiring private property by eminent domain is known as condemnation.

Eminent domain traditionally has been used by governments to condemn land for building roads, schools, goverment buildings, and the like. The right of eminent domain may also be assigned to public and private corporations engaged in activities regarded as benefiting the public, such as the development of port facilities, the building of a canal or railroad, or the redevelopment of a blighted area. In 2005 the U.S. Supreme Court, in Kelo v. the City of New London, ruled that the Connecticut city had the right to condemn unblighted private property and transfer it to another private owner for development even if the only public benefit might be increased employment and tax revenues. Public outcry over the decision subsequently led most states to adopt legislation or constitutional amendments that limited, in varying degrees, the ability of state and local governments to use eminent domain to condemn private property for use by a private corporation. At the same time, some government officials and private developers raised concerns over how the laws and amendments would affect their ability to undertake large-scale development projects.

See also public ownership.

Eminent domain (United States), compulsory purchase (United Kingdom, New Zealand, Republic of Ireland), resumption/compulsory acquisition (Australia) or expropriation (Canada, South Africa) in common law legal systems is the inherent power of the state to seize a citizen's private property, expropriate property, or rights in property, without the owner's consent. The property is taken either for government use or by delegation to third parties who will devote it to "public use." The most common uses of property taken by eminent domain are public utilities, highways, and railroads. Some states require that the government body offer to purchase the property before resorting to the use of eminent domain.

The term expropriation as used in the law of eminent domain is not to be confused with situations in which private property is seized by revolutionary governments from its former owners and confiscated without payment. It should also be differentiated from forfeiture which is an uncompensated seizure of contraband from criminals and its confiscation by the government.

The term condemnation is used to describe the act of a government exercising its power of eminent domain to transfer title to private property from its rightful owner to itself. It is not to be confused with the same term that describes a declaration that real property, generally a building, has become so dilapidated as to be legally unfit for human habitation due to its physical defects. This type of condemnation of buildings (on grounds of health and safety hazards or gross zoning violation) usually does not deprive the owners of the title to the property condemned but requires them to rectify the offending situation or have the government do it for them and bill them for the cost.

Condemnation via eminent domain indicates the government is taking the property or an interest in it, such as an easement. In most cases the only thing that remains to be decided when a condemnation action is filed is the amount of just compensation, although in some cases the right to take may be challenged by the property owner on the grounds that the attempted taking is not for a public use, or has not been authorized by the legislature, or because the condemnor has not followed the proper procedure required by law.

The exercise of eminent domain is not limited to real property. Governments may also condemn personal property, such as supplies for the military in wartime, franchises, as well as intangible property such as contracts, patents, trade secrets, and copyrights.

History

The first case of eminent domain in English law is called the "Due Process" or the "King's Prerogative in Saltpeter Case". The English king needed saltpeter for munitions and took a saltpeter mine from a private individual. The private party sued the king and the court established the right of the sovereign to take "private property for public use" without liability for trespass but requiring payment of compensation for the taken saltpeter. When the colonies became the United States and the English Common Law was adopted as the law of the new nation, this principle was recognized. Contrary to popular belief, the Fifth Amendment to the Constitution did not establish this right in the U.S., as it was already inherent in common law. The Fifth Amendment limited the right of eminent domain by requiring that takings be for "public use" and that "just compensation" be paid for the taken property. The term eminent domain is used primarily in the States, where the term was derived in the mid-19th century from the legal treatise, De Jure Belli et Pacis, written by the Dutch jurist Hugo Grotius in 1625, who used the term dominium eminens and described the power as follows:

"... the property of subjects is under the eminent domain of the state, so that the state or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way. But it is to be added that when this is done the state is bound to make good the loss to those who lose their property."

However, another noted jurist, Samuel von Pufendorf, in his work, De Jure Naturae et Gentium criticized the usage of the term "eminent domain". In his analysis of the control ("potestas") of property he made a classification as follows:

(a) Control, in the proprietary sense, as of that which is one's own, he termed "dominium";

(b) Control, in the governmental or sovereign sense, as of that which belongs to others, he termed "imperium". It was his conclusion that a more accurate term for the power to take property for public use would be "imperium eminens".

Many other jurists, like Cornelius Bynkershoek and Heineccius also were of the same opinion as Puffendorf. However, Heineccius noted that though there is a difference and it is imperium that belongs to rulers, still it would be futile to condemn the term when it has been so widely accepted.

The term compulsory purchase, also originating in the mid-19th century, is used primarily in England and Wales (see compulsory purchase order, and other jurisdictions that follow the elements of English law. Originally, the power of eminent domain was assumed to arise from natural law as an inherent power of the sovereign. Some states (New York, Louisiana) use the term appropriation as a synonym for the exercising of eminent domain.

Allodial versus Feudal Title

Allodial title is the title to land generally held in freehold, by an individual or group that is sovereign on that land. Thus, in English law, only the monarch holds allodial title. All others are tenants of the sovereign through their feudal vassalages. Sovereigns generally gain allodial title either by grant of another sovereign to such title, or through right of conquest. In this respect, while colonial American land grants were typically feudal grants in fee-simple, the victory of the American cause in the American Revolutionary War is considered an act of conversion to allodial title, such that the king was no longer the sovereign of the colonies. However, the new holders in this case are the several states that engaged in the revolution, and it is upon this basis that the practice of fee-simple titles is continued in the United States. This is an issue of dispute by some constitutionalist and property rights groups, with some individuals occasionally attempting to patent allodial titles to their land. Some states, notably Nevada, have instituted an Allodial Title Program in which property owners can purchase allodial title to their land essentially by paying an amount discounted from the sum of all future property taxes for the term of the owner's life expectancy.

United States

In the United States, the Fifth Amendment to the Constitution has been interpreted to require that just compensation be paid when the power of eminent domain is used, and has also been interpreted so that, as a pre-requisite to the use of eminent domain, the property must be taken for "public use". These requirements are sometimes called the takings clause.

The original judicial construction of "public use" was relatively strict: it required that the land be used by the public, the common example being military installations, government buildings and public roads, as well as railroads and public utility facilities. The term "public use" became interpreted more expansively in Berman v. Parker (1954), in which the U.S. Supreme Court reviewed an effort by the District of Columbia to raze properties that were primarily--but not entirely--blighted, in order to transfer their sites to private redevelopers who would construct condos, private office buildings and a shopping center. The Supreme Court ruled against the owners of non-blighted properties within the area sought to be seized on the grounds that the project should be judged on its plans as a whole, not on a parcel by parcel basis. The Court held that the term "public use" encompassed a broader notion of public benefit than simply providing government facilities, railways and other utilities commonly used by the public. The elimination of blight was held to be such a clear responsibility of government, that it justified the use of the eminent domain power. Hawaii Housing Authority v. Midkiff (1984) arose from the Hawaii legislature's determination that private ownership of land on the Island of Oahu was concentrated in so few hands as to form an oligopoly, causing the private market in land to malfunction. In response, the Hawaiian government proposed to increase the number of owners by, among other things, granting full ownership rights to those who previously used land as a tenancy. Again, while on its surface the case involved a transfer of land from one private party to another, the Court held that the elimination of an oligopolistic market in land was a sufficient public benefit justifying the redistributional takings.

The Supreme Court has largely given the public use requirement an expansive interpretation and has allowed takings of private property for reconveyance to other private parties, or in some cases by private parties directly, on the theory that the new owners will put the taken land to more lucrative uses that are likely to generate more tax revenues. This is known as "economic redevelopment." It uses eminent domain to enable acquitre and then convey land to commercial development or redevelopment to increase tax revenues. The Supreme Court's decision in Kelo v. City of New London, 545 U.S. 469 (2005), affirmed the majority decision of the Connecticut Supreme Court and allowed such takings, was heavily publicized in the media. This increased awareness of eminent domain post-Kelo, inspired a great public outcry. Several states have enacted or are considering state legislation that would drastically restrict the state's own power of eminent domain. The Supreme Courts of Illinois, Michigan (County of Wayne v. Hathcock)(2004)[1], and Ohio (Norwood, Ohio v. Horney)(2006) have recently ruled to disallow such takings under their state constitutions.

The protesters maintain that the Kelo judicial approach favors wealthy redevelopers at the expense of lower middle class individual home owners, and encourages profligate municipal expenditures in support of dubious private projects that sometimes fail to achieve the promised public benefits.

Most courts have held the fair market value of the condemned property to be the constitutionally required "just compensation." Its determination is a judicial question, and it is usually determined in a trial by jury, on the basis of the parties' appraisal testimony. Some states (Connecticut, New York, and Rhode Island) do not use juries. There, condemnation awards are made by judges. Critics contend this damages personal property rights.

Public use

The current Supreme Court understanding dates back to 1984 when Sandra Day O'Connor held in Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984) that Hawaii's redistribution of land was constitutional. One must understand what the High Court had held as "public"; for local government in zoning cases as in Village of Euclid, Ohio v. Ambler Realty Co., 272 U.S. 365 (1926) and in city urban renewal projects like in Berman v. Parker, 348 U.S. 26 (1954) public use was quite expansive. O'Connor tried to craft an opinion which, allowing for the state's actions, tried to limit incentives for expansive views of public use.

The current rule on public use upholding the eminent domain power of state government was generally affirmed by Kelo v. City of New London, 125 S. Ct. 2655 (2005), though the justices recognized that the several states have the authority to pass statutes or state constitutional amendments further restricting eminent domain by either defining public use narrowly in their states or by granting property owners more rights than the federal Constitution if they so chose. Many have taken up the challenge, with Alabama, New Hampshire, and several other states passing temporary statutes as well as constitutional amendments to restrict eminent domain strictly to uses in which the property will be owned by a government entity. One such amendment was approved in Florida's 2006 statewide elections.

Economic argument of hold outs

Supporters contend that seizures of private property are necessary to the improvement of communities when transaction costs prevent private parties from agreeing on the most efficient use of land.^[1] Opponents point out that, over a period of 200 years, American city-dwellers created large land assemblages and major structures without the coercive power of eminent domain, which they never got to use for urban redevelopment until the 1950s. Critics also point out that even successful redevelopment revives only limited areas (such as downtowns), leaving other city areas in decline. Moreover, with the ongoing migration of the past half-century from cities to suburbs, it is inevitable that cities lose population and jobs, resulting in blighted areas that cannot be revived by taking more low- and moderate-cost city housing, thus driving more people out to the suburbs.

Eminent domain has driven the development of railroads and defense infrastructure, permitting the construction of many otherwise impossible connections. In the 20th century, it was used to construct World War II and Cold War defense installations. From the early 1950s on, more than 42,000 miles of roadways were acquired by eminent domain to build the Interstate Highway System. Ports, airports, and government buildings have also been constructed on land appropriated through eminent domain.

More recently, eminent domain has come to be used for private purposes (such as shopping malls), which has led to the current controversy. In some cases, the non-government entities using eminent domain have been community groups trying to take control of planning and development. Such is the case of the Dudley Street Initiative, a community group in Boston, Massachusetts, which attained the right to eminent domain and has used it to claim vacant properties for the purpose of "positive community development". In other cases, well connected firms persuade local governments to take property (sometimes that of their competitors) and turn it over to them.^[2]

The controversy is further fired up by the courts defining the "just compensation" promised by the Constitution so narrowly that displaced home-owners and businesses are not fully compensated for their demonstrable economic losses, which are sometimes deemed "noncompensable". This is particularly controversial in cases where business properties are taken, the owners are not compensated for lost business, and the taken land is turned over to another business at no cost.

Back in 1798, Justice Samuel Chase in Calder v. Bull (3 U.S. 386) held that it was preposterous for the government to take one person's property with no restriction and give it to another private party for their own profit. Indeed, it was this very lack of restrictions on Donald Trump's use of the land that he sought in Coking vs. C.R.D.A that caused New Jersey Superior Court Judge Richard Williams to rule against Trump and Atlantic City. But journalists in the Coking case referred to this as a victory on a "technicality", rather than one of principle, and while today, many still adhere to this traditional view, which they see as morally sound, most courts have not lent much support to it.

Private economic use of properties acquired through eminent domain

Since the Supreme Court's Kelo decision, more than 5,783 properties have been threatened or condemned by local governments. Some of the examples cataloged in Dana Berliner's Opening the Floodgates follow:[2]

In March 2005, officials in Garfield Heights, Ohio, called for the seizure of 52 homes and 13 undeveloped properties. The 52 homes were blighted, according to city's development plan, because they were too old and too small. The next month, the City engaged a private developer who hopes to build Bridgeview Crossing, a shopping center that will be anchored by a Lowe's and a Target.

In July 2005, the city of Oakland, California, evicted two auto repair and supply businesses in order to replace them with 1,000 new condos and apartments as well as with a Sears tire and auto shop.

In December 2005, the city of Riviera Beach, Florida, approved a plan to acquire 283 properties and displace one thousand renters in order to build luxury housing and a marina. The city attempted to get the plan started before Florida eminent reform legislation went into effect.

In January 2006, the city of Baltimore, Maryland planned to seize 75 properties for the Charles North development project. Seven of those properties had been sold in 2005 to investors who planned to redevelop the land. The city also decided to acquire the 90-year-old Parkway Theater while it was under active restoration.

In September 2006, city of Burlington, Iowa, officials voted unanimously to demolish all 72 properties in a 23.7-acre neighborhood known as "The Manor." The affordable housing would be replaced by a commercial development yet to be determined by the city.

In September 2006, the City Council members of Auburn, Washington voted unanimously to approve a Community Renewal Plan, which labels blight as anything that impedes economic development. 490 properties are currently under threat, including 248 homes, a hospital, a church, several banks and restaurants as well as a Masonic temple.

In January 2007, the Supreme Court of the United States declined to hear the case of Bart Didden against the village of Port Chester, New York. Didden owned a property in the village's urban renewal district that he hoped to develop into a CVS pharmacy. The village's chosen developer demanded that Didden and his business partner either pay $800,000 not to have their land condemned or enter into a 50-50 partnership with the developer, whose plans called for a Walgreens pharmacy on the site.

On November 26, 2006, a private landmark restaurant called the Metro Diner in Tulsa OK was closed as a result of eminent domain. The private University of Tulsa wanted the land for its own development and forced the diner to close. ^[3].

Long Branch, New Jersey, a city with six redevelopment zones, three of which are part of the 12-acre beach front project. The city wishes to replace the Victorians and beach bungalows currently on the site with condominiums and townhouses. 140 properties were condemned before Kelo and the city hopes to condemn 63 more properties to complete the project.

Also, Atlantic Yards project in Brooklyn, New York, promoted by mayor Michael Bloomberg, will be a private use project, yet it will involve eminent domain appropriation of 68 private homes and businesses.^[4].

Nuisance law

See also: Regulatory taking

When a property owner's use is improper, the state under its broad police power may ban it as in Hadacheck v. Sebastian 239 U.S. 394 (1915) in which Justice McKenna held that an owner of a brickyard business was not entitled to compensation because the zoning laws in Los Angeles prohibited his use because it was a nuisance.

Safeguards against government action

The Fifth Amendment to the U.S. Constitution requires that property may only be taken for "public use", and upon payment of "just compensation". But the U.S. Supreme Court has diluted the meaning of "public use" to such an extent that virtually anything that a local condemning authority declares to be "public use" will be accepted by the Supreme Court and the lower federal courts. Some state courts disagree and in recent years the courts of Illinois, Michigan, Oklahoma, South Carolina and Pennsylvania have taken the position that the taking of private land for so-called "economic redevelopment" -- i.e., for re conveyance of the taken land to private companies for the construction of private, profit-making enterprises such as shopping malls, factories, office buildings and even gambling casinos does not meet the "public use" limitation under the state Constitution.

Property-rights advocates contend that abuses of the exercise of these powers in the past require substantial additional safeguards to protect the people from having their homes and businesses taken for what are obviously private, not public, uses.

Federal statutes (and their state counterparts) require relocation assistance programs to be administered by the various states in order to receive Federal participation in the costs of the improvements (often 80%), and further require full certification that the public process and benefits were offered to the claimants and that the benefits were actually paid to the correct claimants and displacees. However, the benefits payable under the Act provide only partial compensation to the displaced loaners (for example $20,000 is the maximum payable under the Act for the destruction of a business), and the Act does not allow the owners to sue to enforce its provisions.

The use of eminent domain has slowed nationwide as the full build-out of the Interstate System approaches and reflects the fact that needs in the future will be for mostly projects of a local nature such as schools, roads, and other local improvements. The extensive use of eminent domain for such purposes as economic development are currently under attack in many jurisdictions and there is a movement to pass state statutes to limit this use. Seven out of nine states that had such initiatives on the ballot in the 2006 election, have adopted laws or state constitutional amendments limiting or eliminating the use of eminent domain for "economic redevelopment" that does not eliminate slums or blight, and only finances redevelopment by private profit-making entities.

As of January 2007, 34 states had enacted some kind of legislation reforming eminent domain laws, while 13 had failed to enact any legislation regarding eminent domain (three state legislatures did not hold sessions in 2006). Seventeen of those thirty-four states either prohibited the use of eminent domain for private development purposes or substantially strengthened their definitions of blight, while the other seventeen increased eminent domain protections.^[5]

Governor Richardson of New Mexico became the first governor to veto eminent domain reform legislation resulting from this recent surge in public interest.^[6]

Bush Executive Order

On June 23, 2006 - on the one-year anniversary of the Kelo decision (see above), President George W. Bush issued an executive order stating in Section I that the Federal Government must limit its use of taking private property for "public use" with "just compensation", which is also stated in the constitution, for the "purpose of benefiting the general public." He limits this use by stating that it may not be used "for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken."^[7]

Examples

• Controversy on the Delaware: A Look Upstream at the Tocks Island Dam Project
• United States v. Carmack
• U S v. Gettysburg Electric Railway Company (160 U.S. 668) January 27, 1896
• Norwood, Ohio v. Horney
• Kelo v. City of New London

Europe

In many European nations, the European Convention on Human Rights provides protection from appropriation of private property by the state. Article 8 of the Convention provides that "Everyone has the right to respect for his private and family life, his home and his correspondence" and prohibits interference with this right by the state, unless the interference is in accordance with law and necessary in the interests of national security, public safety, economic well-being of the country, prevention of disorder or crime, protection of health or morals, or protection of the rights and freedoms of others. This right is expanded by Article 1 of the First Protocol to the Convention, which states that "Every natural person or legal person is entitled to the peaceful enjoyment of his possessions." Again, this is subject to exceptions where state deprivation of private possessions is in the public interest, is in accordance with law, and, in particular, to secure payment of taxes.

France

In France, the Declaration of the Rights of Man and of the Citizen similarly mandates just and preliminary compensation before expropriation.

England and Wales

In England and Wales, and other jurisdictions that follow the principles of English law, the related term compulsory purchase is used. The landowner is compensated with a price agreed or stipulated by an appropriate person. The operative law is a patchwork of statutes and case law. The principal Acts are the Lands Clauses Consolidation Act 1845, the Land Compensation Act 1961, the Compulsory Purchase Act 1965, the Land Compensation Act 1973, part IX of the Town and Country Planning Act 1990, the Planning and Compensation Act 1991, and the Planning and Compulsory Purchase Act 2004.

Australia

In Australia, section 51, subsection xxxi of the Constitution permits the federal government to make laws with respect to "the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws." This has been construed to not necessarily mean just compensation as a just term might not of necessity be monetary or proprietary recompense, as was particularly notable in The Castle. However, it is for the court to determine what is just and it may be necessary to imply a need for compensation in the interests of justice, lest the law be invalidated (Andrews v Howell (1941) 65 CLR 255). The property is not restricted to real estate. The precedent established by the federal court (Smith v Harrison (1981) 135 CLR 280) extended the states' power to any form of physical property. The court ruled that animals under the federal Marsupial Protection Act (MPA) could be expropriated from private owners and reestablished in reservations.

For the purposes of section 51, subsection xxxi, money is not property which may be compulsorily acquired; the Commonwealth must also derive some benefit from the property acquired and not merely seek to extinguish the previous owner's title (Mutual Pools and Staff Pty Ltd v Commissioner of Taxation (1992) 173 CLR 450). A statutory right to sue has been considered "property" under this section (Smith v ANL Ltd (2000) 176 ALR 449).

The term resumption is a reflection of the fact that all land was owned by the crown in 1788, and that the crown is resuming ownership.

Other countries

Many countries recognize eminent domain to a much lesser extent than the English-speaking world or do not recognize it at all. Japan, for instance, has very weak eminent domain powers, as evidenced by the high-profile opposition to the expansion of Narita International Airport, and the disproportionate amounts of financial inducement given to residents on sites slated for redevelopment in return for their agreement to leave, one well-known recent case being that of Roppongi Hills.

There are other countries such as the People's Republic of China that practice eminent domain whenever it is convenient to make space for new communities and government structures. Singapore practices eminent domain under the Land Acquisitions Act which allows it to carry out its Selective En bloc Redevelopment Scheme for urban renewal. The Amendments to the Land Titles Act allowed property to be purchased for purposes of urban renewal against an owner sharing a collective title if the majority of the other owners wishes to sell and the minority did not. Thus, eminent domain often invokes concerns of majoritarianism.

Most recently (and infamously) in Zimbabwe, the government of Robert Mugabe seized a great deal of land and homes of mainly poor villagers thought to be political opponents of his regime.

Etymology

The Latin term dominium eminens ("supreme lordship") was used in the 17th century by Grotius to describe the concept explained above.

References

1. ^ Richard Posner. Economic Analysis of Law.
2. ^ Dean Starkman. "Condemnation is Used to Hand One Business Property to Another", Wall Street Journal, 1988-12-02, p. A1. 
3. ^ Thomas Cox. "Local Landmark Diner Closed Due To Abuses of Eminent Domain", The Lope, November 26, 2006. 
4. ^ Joseph Goldstein. "Atlantic Yards Project Abuses Uses of Eminent Domain", New York Sun, October 27, 2006. 
5. ^ Castle Coalition. "Legislation Since Kelo," 2005.
6. ^ Bill Richardson (2006-03-07). House Executive Message No. 138 (PDF). (veto of HB 748)
7. ^ "Protecting the Property Rights of the American People", Executive Order 13406, 71 F.R. 36973 (2006-06-23)

Further reading

• Dana Berliner, Opening the Floodgates; Eminent Domain Abuse in a Post-Kelo World, Institute for Justice, June 2006. Available online [3].
• Redevelopment Wrecks; 20 Failed Projects Involving Eminent Domain Abuse, Institute for Justice, June 2006. Available online [4].
• Myths and Realities of Eminent Domain Abuse, Institute for Justice, June 2006. Available online [5].
• Steven Greenhut, Abuse Of Power: How The Government Misuses Eminent Domain, Seven Locks Press, June, 2004, trade paperback, 312 pages, ISBN 1-931643-37-7
• Joshua U. Galperin, A Warning To States, Accepting this Invitation May be Hazardous to Your Health (Safety and Public Welfare): An Analysis of Post-Kelo Legislative Activity. 31 Vermont Law Review 663 (2007).
• Eminent Domain Abuse Survival Guide, Castle Coalition, Available online [6].
• Dana Berliner, Public Power, Private Gain, Institute for Justice, April 2003. Available online [7].
• A.J. Hazarabedian, California Eminent Domain Handbook, California Eminent Domain Law Group, June 2005. Available free online [8].
• John Ryskamp, The Eminent Domain Revolt: Changing Perceptions in a New Constitutional Epoch, New York: Algora Publishing, 2006.
• Just Compensation, A Monthly Report on Condemnation Cases, Gideon Kanner, Editor, Published monthly since 1957.
• Property Owners' Rights Handbook: Your Rights and Remedies Under the Eminent Domain Law, Sullivan, Workman & Dee, LLP, 2005. Available online [9].
• Bulldozed: 'Kelo,' Emiment Domain and the American Lust for Land, Carla T. Main, Encounter Books, August 2007.
• NCSL: Eminent Domain. Available online [10]
• NCSL: State Case Law Prohibiting Eminent Domain for Economic Development, August 2005. Available online [11]

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